Getting started with Coinbase

Like many others, my first bitcoin purchase came through Coinbase. It has an easy to use interface. It charges 1.5% fee if you use a bank account to purchase bitcoin. If you use credit card, the fee goes up to 4%, so don’t do that. If the only way you can fund your Coinbase account is via credit card, then you probably shouldn’t be buying bitcoin.

Once you purchase your bitcoin, it takes 7 days for the coin to actually show up in your Coinbase account. The website says 3-5 business days (which equals 7-10 calendar days), but it’s been 7 days for all my purchases. However, the price at which you bought the coin is locked in. So if Bitcoin is worth $15,000 when you buy some and the prices drops to $14,000, your purchase price will still be $15,000 when it shows up in your Coinbase account.

You are not able to sell or transfer your coin until it shows up in your Coinbase account. I have found this delay to be both annoying and helpful. Annoying, because I often have the urge to buy some other cryptocurrency right away because of some breaking news. However, the delay is helpful because it reminds me to hold back on day trading habits. As a stock investor, I am buy and hold and shun day trading. I want to enact the same discipline in my bitcoin investing.

Currently, through Coinbase you can only purchase Bitcoin, Bitcoin Cash, Ethereum and Litecoin. If you want to trade other cryptocurrencies, you have to transfer your coins to another exchange. I use Bittrex. Also, Coinbase does not allow you to transfer between its coins. So if you have Bitcoin, but want to exchange it for Ethereum, there is no way to do that within Coinbase. You would have to transfer your Bitcoin to another exchange (like Bittrex), transfer your Bitcoin to Ethereum, then transfer your Ethereum back to Bitcoin.

Bittrex has hundreds of crypto currencies available to purchase. However, Bittrex does not have function for USD deposits. You have to use Bitcoin or Ethereum to purchase crypto currencies. This makes it confusing to track your cost basis. So if I use 0.05 Bitcoin to buy 1 Ethereum, I need to record the USD of that 0.05 Bitcoin at the time of exchange if I want to know my cost basis. Bittrex will only record the fact that I used 0.05 Bitcoin for the purchase.

That’s the general process. I’m still figuring out the intricacies of Coinbase and Bittrex and will post more as I tinker more.

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One thought on “Getting started with Coinbase

  1. Pingback: The 3 Don’ts for new crypto-investors | Coin Tofu

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